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The Microsoft Table PC will become the most popular form of PC in five years, according to Bill Gates.

In his keynote speech at this year's Comdex trade show in Las Vegas, Microsoft chairman and chief software architect Bill Gates unveiled prototypes of the portable Tablet PC, which will run on a specialised version of the software giant's latest operating system, called Windows XP Tablet PC Edition.

Gates demonstrated prototypes from hardware manufacturers, including Compaq and Acer, which run a variety of new software applications. One such application, called Journal, blends Microsoft's Word software with handwriting recognition capabilities.

The portable devices, due out in 2002, will become the most popular form of the PC within five years, Gates claimed. "Next year, a lot of people in the audience will be taking notes with those Tablet PCs," he said.

Gates also unveiled a preview version of Microsoft's Xbox video game console and demonstrated a new Web service built on the company's .Net technology.

Against the backdrop of an uncertain economy and declining PC sales, Gates said the most impressive technological advances have yet to come. Faster PC chips and improved network connections, combined with widespread use of voice and handwriting recognition, will enable people to get work done faster and more efficiently, he predicted.

"In the decade ahead, we will provide over twice the productivity improvements that we did during the 90s," Gates said.

Some of those improvements will come through a new version of Office XP, Microsoft's suite of productivity applications, which Gates said would be available in time for the Tablet PC's launch next year.

The latest version of Office XP lets users write handwritten notes in applications such as Outlook and Word, and edit those notes as if they were digital text.

Gates also showed the handwriting feature in a future version of Windows Messenger that lets users exchange notes or sketches using the company's instant messaging software.

Productivity improvements will also come from Web services, or software programs that let disparate business applications "talk" to each other over the Internet using standards such as XML, he said.

Such software, which is also being developed by rivals such as Sun Microsystems, would allow buyers and sellers to find each other more easily and provide companies with a wider choice of who they do business with, Gates said.

Robyn Pierce of Microsoft's .Net group showed how Web services could be combined with the software giant's Passport authentication service and an Excel spreadsheet to make filing expense reports easier.

Pierce showed how the application could trawl the Internet for an employee's recent credit card transactions and mobile phone calls, and then import the information to the spreadsheet.

The program can also add XML tags to outgoing mail, so the employee could e-mail the expense report to company headquarters where back-end software would process it automatically, she said.

Microsoft will release in December a Web services tool for Office that will allow businesses to experiment with adding functionality like this to Microsoft applications, Pierce said.

"XML Web services is the key standard for the decade ahead," Gates said. "That's the standard necessary to treat the Internet as a programming environment."

Elsewhere in the home, wireless networks will allow all kinds of content, including digital music and videos, to be beamed around the house and accessed from any room, Gates said.

Challenges include improving security, ensuring ease of use and making faster Internet access available to all homes, he added.

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